How can borrowers reduce their housing loan EMI and make their payments?

With the current RBI repo rate of 4%, most financial institutions have cut down home loan rates. Resultantly, there has been a sharp rise of 25-40% in home loan applications across cities.

This data also states that most of these disbursals constitute mid to high-range homes. Hence, to finance such properties, individuals opting for larger home loans.  Nevertheless, it is crucial for them to know how to reduce home loan EMI and ensure minimal monthly liability. 

Ways to reduce home loan EMI

Whenever individuals borrow a home loan, they need to pay EMIs as per the amortisation schedule. However, the ways to reduce EMI is also different for new and existing borrowers. Some of them are discussed below.

  1. For new borrowers

Following are the tips new borrowers can follow to know how to reduce home loan EMI. 

  • Compare interest rates

Borrowers can check home loan offers online to get an overview of interest rates, processing fees and other charges of different lenders. Hence, before availing a loan, one must conduct in-depth research to ensure a competitive interest rate that result in affordable EMIs. 

  • Choose longer repayment tenor

If an individual chooses a longer tenor, the payable EMI will be less. But it is to be noted that opting for a longer tenor will attract a higher housing loan interest on the principal amount. Therefore, one should always choose the tenor carefully after considering the housing loan interest rate before opting for this credit. 

  • Make a bigger down payment

As financial lenders lend only 75-80% of the property’s value, borrowers need to pay the remaining amount as a down payment. Hence, borrowers should make a bigger downpayment to reduce interest and EMI burden. 

The existing borrowers can follow the tips below to reduce their home loan EMI outgo. 

  1. Existing loan borrowers

If you are an existing home loan borrower and want to know how to reduce home loan EMI, follow the pointers below. 

  • Loan refinancing

The interest rate always varies from one lender to another. So, if borrowers cannot continue with a higher interest rate, they can switch to another lender that provides a lower interest rate. However, in that case, they should also consider charges associated with transfer to make an informed decision. 

  • Opt for part-prepayment 

Borrowers can use their surplus and opt for pre-partpayment before the tenor ends. Since part-prepayment reduces the outstanding amount, the overall interest payable reduces, making EMI affordable. Consequently, it will either reduce the EMI or the tenor of the repayment. For more convenience, borrowers can use an EMI calculator to adjust the tenor and EMI accordingly. 

  • Negotiating with a lender

If borrowers maintain good terms with the existing lender, they can negotiate for lower interest rates. With reduced interest rates, the EMI payable will reduce accordingly. However, borrowers should access an online EMI calculator to secure the most competitive interest rates available to them. 

After understanding how to reduce home loan EMI, borrowers can pay their monthly instalments in both online and offline mode at their convenience.

  1. Online mode- Individuals can pay their EMIs through different online payment modes like net banking, mobile wallet, UPI, etc. Selected HFCs also allows their borrowers to pay EMI through their dedicated customer portal or mobile App. 
  2. Offline mode- Besides, individuals can pay the EMI payable offline through cheque, etc. 

Hence, for paying EMIs, borrowers need to know about both the procedures thoroughly and select a suitable one at their convenience. However, in any case, they should keep the payment receipts for future references. 

Furthermore, existing borrowers can enjoy pre-approved offers extended by reputed housing finance companies. These offers can be availed on a home loan, loan against property etc. Further, these offers simplify and expedite the loan application process and make it easy for the borrowers.

Now that borrowers know how to reduce home loan EMI and the payment options, they can ensure a pleasant borrowing experience.

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